Remarks of Assistant Secretary Rohde at the European American Business Council

Remarks of Gregory L. RohdeAssistant Secretary of Commerce for Communications and InformationEuropean American Business CouncilWashington, D.C.August 3, 2000

"How do we know where we are goingif we do not know where we are?"

Introduction

How do we know where we are going if we do not know where we are? That phrase has been on my mind lately as I have heard some political pundits turn the digital divide debate into a political football. It is also characteristic of the debate over Internet charging arrangements which is emerging as one of the major telecommunications issues in several different international fora.

Today, I'm going as a starting point to take a minute to outline the digital divide problem as we define it in the U.S., to look at some of the solutions we're trying to implement as we move from Digital Divide to Digital Inclusion, as our new Commerce Secretary, Norman Mineta, likes to say. Then, I'd like to broaden the discussion to show that the Digital Divide isn't only a U.S. problem, and Digital Inclusion is a policy that ought to be applied everywhere.

From Digital Divide to Digital Inclusion

Most of the emphasis we have at the Commerce Department has been on ways we can work within the United States to help those who don't have access to the best of information technology, or in some cases, even to adequate information technology. That's because this Administration recognizes that the key to participation in the new economy, as worker and as consumer, lies with having the right skills and access to the right tools - the tools of the information age. The digital divide is a real problem, but a solvable one.

We can take as our base the third Falling Through the Net report, which NTIA published last year. That report, using data collected by the Census Bureau, found that Americans from low-income families, those living in rural areas and racial minorities have less access to the tools of the new economy - computers and Internet access. We found, for example, that urban households with incomes of $75,000 or more are more than 20 times as likely to have access to the Internet than rural households at the lowest income levels. That's the kind of statistic we use when talking about the Digital Divide.

NTIA also conducted a joint study with the Rural Utility Service (.pdf format) on the deployment of broadband technologies. In that study we found that another digital divide is emerging where DSL and cable modem services are being deployed largely in urban areas and rural communities are falling behind. Low population density and geographic distances render some broadband services such as DSL and cable modem service either uneconomical or technically infeasible.

Despite these studies, some Washington pundits have dismissed the notion that a divide exists and suggest that the Administration should not waste its time and energy on it because the market will resolve any deficiencies that may or may not exist. That might be a comfortable view perched in a Washington think tank where one can see the streets being torn up with telecommunications carriers laying facilities in the business districts of major cities and wealthy suburbs. But most of America knows better.

We really do not need to rely upon studies to see that there is a digital divide in this country. Just visit the Sioux and Crow Indian people of the Great Plains where only a small percentage have access to basic telephone service and there are no cell towers or fiber optic cables coming their way. Or visit the housing projects in Brooklyn, New York where large diverse populations living in poverty have no access to computers and have no visible means to see where they can obtain the skills needed to succeed in the information age.

We know that some progress has been made in closing the Divide since the time our report came out last year. To measure the changes, we are having another survey done by the Census Bureau this month. Our Falling Through The Net 4 report should be out some time this fall. In the meantime, there has been a lot of debate trying to measure Internet access and whether the Divide is truly closing. There are some analysts and studies who contend that the market will take care of the problem, and some who contend that there is no Digital Divide at all, given the increased availability of Internet access. There are also studies that show that the Divide still exists.

We will never to a digital inclusion unless we know where the digital divide exists.

In this Administration, we believe there's a legitimate role for government to make sure no one is left behind. Our experience tells us that market forces won't solve every problem. The interstate highway system wouldn't have been built by the market, or allowed us to get to the point that 95% of American homes have access to a telephone.

To work on the problem domestically, we're pursuing the Digital Inclusion philosophy, as Secretary Mineta so aptly named it. There are several elements. We make people aware of the problem through our reports and public statements. I find it amusing that many of the commentators who say the Digital Divide problem has been solved somehow never stumbled onto it in the first place - until the President, the Vice President, and the Commerce Department began highlighting it and by proposing programs in the Federal budget to deal with the issue. The vice president, in particular, has long been a leader on technology issues, going back to his days in the House of Representatives when he founded the Congressional Future Caucus to look at issues and ideas that would eventually evolve into much of what today's Internet has become. His vision of the little girl in Carthage, Tennessee looking at material in the Library of Congress seemed pretty far-fetched in the late 1970s and early 1980s. It's reality today. Even before the President and Vice President took office, they held an economic summit meeting in Little Rock in December, 1992, and one of the was on the national information infrastructure.

The President has elevated this issue as a matter of national priority. I was with him on two stops of his New Markets tour, in southeast Washington and in Whiteville, North Carolina at which he also said we must take action to make sure everyone is included in the Information Age. It was at Whiteville in April that the President released a report we at NTIA compiled along with our friends in the Agriculture Department which showed that the rural areas will lag behind other parts of the country in being wired for the next stage of development - the high-speed broadband services that will do so much to help businesses expand and create new markets, and improve the Internet services we know today.

The Administration's budget for FY 2001 reflects a targeted approach to create digital inclusion. Our Technology Opportunities Program and proposed Connecting American Families program for home Internet access reflect our concerns that there is a role for the Federal government in providing grant funding to local groups, in coming up with local solutions for non-profits, local governments and other organizations. And then we pass on the information on what those grantees learn to others. We have also asked for money to spur broadband deployment and to fund community technology centers. We are meeting with mixed reviews so far in the appropriations process.

Digital Divide As An International Issue

As the G-8 summit last month in Okinawa showed, the Administration views the Digital Divide, and Digital Inclusion, as more than a domestic issue. Again, this is not new. The vice president has talked about the need for a Global Information Infrastructure since 1994 - the next logical step after the National Information Infrastructure policy base that the Administration has advocated since it took office.

Statistics show that Internet penetration is happening unevenly around the world, unevenly even throughout Europe. According to statistics from May, there are about 108 million Internet users in Europe, for a penetration rate of 34%. That figure varies from 65.2% in Sweden to 45.6% in the U.K., 31.6% in France and 11.4% in Portugal. Worldwide, we see even greater disparities. According to the Computer Industry Almanac report from last November, there were 57.5 Internet users per 1,000 people on a worldwide average. That ranged from a high of 492 Internet users per 1,000 people in North America, to 7.88 users per 1,000 people in the Middle East and Africa. This is the global Digital Divide.

President Clinton and the other leaders dedicated themselves to help remedy the situation. There will be a Digital Opportunity Task Force to help coordinate government efforts. The Overseas Private Investment Corporation will have a new $200 million line of credit for e-commerce and Digital Divide projects. The private sector, including America Online and Cisco, will contribute as well through new projects.

Equally as important, and in keeping with our philosophy of local solutions for local problems, each area of the world is working on its solutions. For the part of the world in which you do business, that means the eEurope initiative, and Europe 99 - policy guidelines that will point the countries in the European Union toward the goal of a "faster, cheaper, more secure Internet," through rolling out new infrastructure and lifting old regulatory barriers. We support the eEurope initiative and objectives, and we particularly agree with the goal of lessening regulation on electronic commerce. Individual countries have their policies also. U.K. Prime Minister Tony Blair put forward an ambitious plan in March of this year which has the goal of making the Internet accessible to all, and promoting usage on a regular basis by at least 70% of the people in the next 3 years. This is, he said, "an achievable target."

There are two very profound trends that are affecting the Internet revolution which we must keep in mind:

Most of the projected Internet growth in future years will begin overshadow the current U.S. dominance. While the U.S. is perhaps has the highest proportion of Internet users in the world, that picture is changing fast. Within 3 years, the developing world will represent more than 50% of the Web. And, within 6 years Chinese will likely be the most widely used language on the Internet.

The wireless revolution will push the Internet revolution to an entirely new level. By years end one in five cell phones worldwide will be capable of Internet access and within five years, a half a billion people worldwide will access the Internet through a wireless device. Wireless Internet access will not only mean that more people will have access, but it also means that the reach of the Internet into many more aspects of our lives - e.g., into our cameras and cars.

That is why the development of 3rd generation wireless services - or otherwise known as IMT-2000 - is so important for administrations around the world. The U.S. is pleased that the World Radio Conference adopted a flexible, multi-band approach for IMT-2000. This approach will permit swifter allocation of additional spectrum and advance the prospect of global roaming for Internet access.

Internet Charging Arrangements:

Before closing, I wanted to address the issue of Internet charging arrangements. Some regions of the world have recently been attempting to seek global acceptance of a plan to have governments regulate the Internet charging arrangements to address perceived inequities. Because of the fact that the Internet grew up first in the U.S., we have served as the surrogate host for much of the world's Internet activity. Some are mistakenly drawing the conclusion that the Internet charging arrangements between commercial carriers are the cause of the current distribution of Internet hub sites.

In my judgement, the asymmetry in Internet traffic between the U.S. and Asia for example will be rectified through closing domestic digital divides. As native applications develop, then it's likely that a good portion of the Internet traffic that is currently coming to the U.S. will stay home, and that the current imbalance of Internet traffic between there and here will work itself out, much as it did in Europe as telecom regulation was liberalized and more native content developed. The current imbalance in traffic, which has prompted some to call for a regulatory solution, could have the effect of freezing the current imbalance into a tariff structure, rather than alter it.

This is less a regulation issue and more of a development issue. In order to get from divide to inclusion we need to know how to define the issue to avoid going down the wrong road.

As we saw in Okinawa, the U.S. Administration is dedicated to closing the digital divide worldwide. With the same dedication of effort that we in the U.S. are applying to move from Digital Divide to Digital Inclusion, we expect that other countries will do the same. The result will be a better system for all of us.